‘Deranged’ US right spins jobs data to hurt Obama’s chances

By Paul Krugman / NY Times News Service

Thu, Oct 11, 2012 - Page 9

If anyone had doubts about the madness that has spread through a large part of the US political spectrum, the reaction to Friday’s better-than-expected report from the US Bureau of Labor Statistics should have settled the issue. For the immediate response of many on the right — and we are not just talking fringe figures — was to cry conspiracy.

Leading the charge of what were quickly dubbed the “BLS truthers” was none other than Jack Welch, the former chairman of General Electric, who posted an assertion on Twitter that the books had been cooked to help US President Barack Obama’s re-election campaign. His claim was quickly picked up by right-wing pundits and media personalities.

It was nonsense, of course. Job numbers are prepared by professional civil servants, at an agency that currently has no political appointees. However, then maybe Welch — under whose leadership GE reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — does not know how hard it would be to cook the jobs data.

Furthermore, the methods the bureau uses are public — and anyone familiar with the data understands that they are “noisy,” that especially good (or bad) months will be reported now and then as a simple consequence of statistical randomness. That in turn means that you should not put much weight on any one month’s report.

However, in that case, what is the somewhat longer-term trend? Is the US employment picture getting better? Yes, it is.

Some background: The US’ monthly employment report is based on two surveys. One asks a random sample of employers how many people are on their payroll. The other asks a random sample of households whether their members are working or looking for work. If you look at the trend over the past year or so, both surveys suggest a labor market that is gradually on the mend, with job creation consistently exceeding growth in the working-age population.

On the employer side, the current numbers say that over the past year the US economy added 150,000 jobs a month and revisions will probably push that number up significantly. That is well above the 90,000 or so added jobs per month that the US need to keep up with population growth. (This number used to be higher, but underlying workforce growth has dropped off sharply now that many baby boomers are reaching retirement age.)

Meanwhile, the household survey produces estimates of both the number of Americans employed and the number unemployed, defined as people who are seeking work, but do not currently have a job. The eye-popping number from Friday’s report was a sudden drop in the unemployment rate to 7.8 percent from 8.1 percent, but as I said, you should not put too much emphasis on one month’s number. The more important point is that unemployment has been on a sustained downward trend. Yet is that not just because people have given up looking for work, and hence no longer count as unemployed? Actually, no. It is true that the employment-population ratio — the percentage of adults with jobs — has been more or less flat for the past year. However, remember those ageing baby boomers: the fraction of US adults who are in their prime working years is falling fast. Once you take the effects of an ageing population into account, the numbers show a substantial improvement in the employment picture since the summer of last year.

None of this should be taken to imply that the situation is good, or to deny that the US should be doing better — a shortfall largely due to the scorched-earth tactics of US Republicans, who have blocked any and all efforts to accelerate the pace of recovery. (If the American Jobs Act, proposed by the Obama administration last year, had been passed, the unemployment rate would probably be below 7 percent.) The US economy is still far short of where it should be and the job market has a long way to go before it makes up the ground lost in the Great Recession. However, the employment data do suggest an economy that is slowly healing, an economy in which declining consumer debt burdens and a housing revival have finally put us on the road back to full employment. That is the truth that the right cannot handle. The furore over Friday’s report revealed a political movement that is rooting for US failure, so obsessed with taking down Obama that good news for the US’ long-suffering workers drives its members into a blind rage. It also revealed a movement that lives in an intellectual bubble, dealing with uncomfortable reality — whether that reality involves polls or economic data — not just by denying the facts, but by spinning wild conspiracy theories.

It is, quite simply, frightening to think that a movement this deranged wields so much political power.